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Model Mutual Fund Portfolio: Revisiting Fund Selection Rules

by James B. Cloonan

Model Mutual Fund Portfolio: Revisiting Fund Selection Rules Splash image

Despite the negative effect of the May-June pullback, the Model Mutual Fund Portfolio had an excellent year in 2010.

The model portfolio had a return of 20.3% last year compared to 17.1% for the overall market, as represented by the Vanguard Total Stock Market Index Fund (VTSMX). During January the benchmark fund got a head start over the model portfolio, 2.2% to 1.0%. The performance for other periods can be seen in Figure

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James B. Cloonan is founder and chairman of AAII.


Discussion

D. from Maryland posted over 3 years ago:

So the model portfolio is 6 times more expensive to own than the benchmark, and the benchmark has twice the risk-adjusted return?

Seems to me the model needs some tweaking.


robert sadofsky from New York posted over 3 years ago:

I don't understand why you take yearly expenses into account as a separate criteria when the long and short term performance of the fund already accounts for fund expenses.
By doing this, you may very well exclude the very best funds, just because they either charge more because they are superior managers or charge more because they do more thorough research than comparable funds.
For whatever reasons the funds have expenses higher than your arbitrary cut off points, the real criteria should be their performance


Richard from Missouri posted over 3 years ago:

Do you plan to start model ETF portfolio similar to the Mutual Fund portfolio ?


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